WPCNR POWER NEWS. News and Comment By John F. Bailey. July 24, 2014:
As the thermometer hit the low 90s with humidity feeling like a wet cotton sock on your face in the lazy July sun yesterday, I could not help but wondering how high my kilowatt hour charge was going to be?
Remember in January when your kwh charge from Con Edison went up 136% in a month.
In January the New York Independent Systems Operator told WPCNR it was a shortage of natural gas due to the high demand for power during a prolonged cold snap.
Now, the thermometer is pushing the 90s. Now they know it’s hot in the summer. They should be prepared for it.
But, hold on on minute, Con Edison. You know it’s hot in the summer. How come my electric bill kilowatt hour charge went from 7.73 to 10.32 cents kwh hour increase in June….34%… ALMOST DOUBLING in two months…from 5.7 cents to 10.32 cents?
I asked Bob McGee of Con Edison Media Relations to explain it all, knowing it is hot why aren’t electricity futures purchased at lower prices in advance to spare the comsumer this annual whacking in midsummer when it is hot and in January when it’s cold?
Bob McGee, spokesperson for Con Edison, says it is not demand that raised the rates
He issued this statement: the new Capacity charge dictated by FERC, the Federal Energy Regulation Commission was added to bills as “incentive” for energy companies to locate plants in the metro area capacity zone and existing companies to upgrade their capacity or build new sources of supply. As if we are going to build new power plants in the metropolitan area in a jiff. (Oh, those environmental reviews!)
McGee issued this statement to WPCNR:
“I’ve spoken to our folks in rate engineering.
Capacity costs are the main driver of increased costs so far this summer.
Energy prices have actually come down a bit because we’ve had a fairly mild summer to date.
Electricity cannot be stored like natural gas, so even if you were buying electricity futures in March or April for the summer, the price would still be higher projecting the summer price spike. It’s not like buying natural gas that can be stored in a gas storage facilty to be delivered later.”
I asked Mr. McGee what are “capacity costs?”
He defined them:
“That’s what’s paid to ensure reliability, i.e., that there will be enough power to draw upon.”
New York State Independent Systems Operator explains the capacity costs this way:
“Bottlenecks in the electric transmission system located north of the Mid-Hudson Valley constrain electric supply to southeast New York and Greater New York City area; in addition several regional generating plants have been or may be retired. Federal regulations mandate (d in the spring of 2014) that areas affected by transmission constraints are to create a “Capacity Zone,” which forces utilities serving the area to purchase virtually all their energy capacity within that zone only, rather than throughout the rest of the state. “
What is the objective of these capacity charges?
“By mandating that capacity be purchased within a limited zone, prices for electric supply will rise significantly. The intent by federal regulators is to raise market prices for electricity locally to encourage development of new power generation by independent companies. The result is that existing generators will be paid a higher price for their electricity by Mid-Hudson residents, negatively impacting househoulds, businesses and economic development efforts.”
What is interesting about the Con Edison electric bill is the capacity charge impact is not clearly broken out on the bill. The consumer cannot readily see, (at least this reporter could not find something called “Capacity Charge” on the bill.
I think would be logical to have so Con Edison would not be blamed for these increases, and consumers would know they have the federal government to blame.
So your bill is higher because the government thinks it should be higher.